What is Stamp Duty? What are the Rates & Charges of stamp duty on Property?

Buying a house is one of the most important decisions that one makes in their life. Investing in real estate or buying a new home takes your hard-earned money and best of knowledge to get the perfect home. And it is really important to ensure that all the paperwork is completed. One of the most important documentation is property registration and stamp duty.

Property registration completes your ownership of the property and stamp duty is a major part of registration.  Registering the property with your own name helps you gain the legal right to the property and will also help you avoid any dispute in future related to the property you have bought. And in this article, we will be telling you each and every detail related to stamp duty and how it is calculated. Here, have a look!

What is Stamp Duty?

Stamp duty is a government tax that is imposed on property transactions. It is payable under the Section 3 of the Indian Stamp Act, 1899. One needs to pay the stamp duty at the time of property registration. The amount of stamp duty varies from city to city and also according to the real estate type.

Since stamp duty is added to the cost of the property, it is better to have an idea before you finalize the deal of your property. Also one need to pay stamp duty on time, otherwise, you will be charged penalty for the delay. In any kind of delay 2% penalty charge is added every month to the charge. This penalty charge can maximum go to 200% of the actual charge.

Stamp duty in Delhi

The stamp duty in Delhi charges are:

• Stamp duty is @3% if it is done by a woman and @5% if it is done by a man
• The registration fee is 1% of total value of Sale Deed + Rs. 100/- as pasting charge.

Though, the charges vary from state to state and according to the property type. Here, have a look at the charges in different states of India.

• Haryana- 12.5% of consideration
• Chhattisgarh- 7.5% of consideration
• Punjab- 6% of consideration
• Madhya Pradesh- 7.5%
• Tamil Nadu- 8%
• Bihar- 7% + 2%
• Assam- 8.25% of consideration
• Maharashtra- 10%
• Rajasthan- 11%
• Meghalaya- 4.6% (up to 50K), 6% (50K-90K), 8% (90K- 150K), 9.9K (up to 150K)
• Uttar Pradesh- 8%
• Nagaland- 7.5% of consideration
• Jharkhand- 7% + 2%
• Tripura- 5% of consideration
• Kerala- 8.5%
• Goa- 8% of consideration
• Karnataka- 10%

What is Property Registration?

Property registration is a process of registering the documents related to your property according to section 17 of the Registration Act, 1908. When you register the purchased property, you need to pay stamp duty on property and registration charges for the same.

When you purchase a flat or property directly from the builder, the registration of property gives you the right to legally use, own and dispose of the property. And when you purchase a flat or a property which is being transferred from one hand to another for the second time, you will have to pay registration charges.

The process of property registration is done at the office of the sub-registrar and that has jurisdiction over the area in which the property is situated or bought. In Indian states, land registration involves a computerized process, where middlemen are not required.

GST impact on Stamp duty and Property registration.

Stamp Duty on property & Registration charges remains unchanged. These charges collected are different in each state. Generally, Stamp duty is between 4-10% and registration charges vary from 0.5-1% of property value.

When is the stamp duty payable?

The stamp duty is payable before the execution of the legal documents that is property registration. When you are buying a property, the stamp duty is generally paid within 30 days of settlement of property document.

What is the penalty charge?

If there is any delay in the payment of stamp duty, then the extra charge is added to the stamp duty charge and that extra charge is called penalty charge. The penalty charge is generally 2% for each month the stamp duty charge is delayed. This penalty charge can go a maximum of 200% of the actual stamp duty amount.

Who is liable to pay?

For stamp duty on property, the buyer/purchaser is liable to pay the charges. But in case of exchange of the property, both the parties have to pay charges equally.

Documents required for Stamp Duty

The documents you need to carry may vary from state to state, but given below are some of the documents which are generally required for stamp duty:

• Deed of partition
• Power of attorneys
• Conveyance of mortgaged property
• Mortgage deed
• Transfer instruments
• Lease deeds
• Certificates of sale
• Gift Deed
• Exchange deed
• Tenancy agreement
• License agreement

How to Pay Stamp Duty?

There are 3 different ways to pay stamp duty on property. Have a look!

• Physical appearance and stamp paper

Being physically present is one the most basic way to pay stamp duty, as you can yourself legally do all the paperwork for yourself. By being physically present, you need to purchase a non-judicial stamp paper with the impressed stamp. Once you are done with purchasing the stamp paper, then all the details regarding the transaction can be written or typed. Though, finding an authorised vendor selling stamp paper is not an easy task. Many times, there is a shortage of form/ stamp paper and you must again next day. Also, if the amount to be paid as stamp duty is big, then you may require many stamp papers. Although, nowadays many people do not prefer paying stamp duty by being physically present as it takes a lot of time.

• Franking

Franking is the process where a franking agent puts a stamp on your documents, which indicates that the stamp duty has been paid. Before executing the transaction, you must contact an authorized band who will then act as a franking agent to deposit the stamp duty.

Every state has different franking charges, a minimum amount is prescribed for franking to every state. Thus, you need to refer to the charges according to the state you live in.

• E-stamping

To make stamping easy, the government has introduced a new way to pay charges and this process is called E-stamping.  Nowadays, in many states, E-stamping is compulsory as it is done online. The best part of E-stamping is that you do not have to search for authorized vendors to buy stamp papers, you can easily get stamp papers for E-stamping on Stock Holding Corporation of India Limited (SHCIL). Stock holding corporation of India Limited has been appointed as an official stamp paper vendor for e-stamping.  SHCIL is also known as the central record of keeping agency for the total e-stamps used.

To pay stamp duty through e-stamping, you must visit Stock Holding Corporation of India Limited (SHCIL) website. There you must select your state to check if e-stamping is available in your state. Then, you will get all the information that you need while paying stamp duty. Now you must fill up the application form available on the website and then give it to the collection centre of stamp duty along with the charges.

Also, you can pay the charges by your Debit card, credit card, demand draft, online banking or cheque. After paying the stamp duty, you will receive a certificate of e-stamp and it will have a unique certificate number that is also called UIN that confirms the issue date.

Stamp Duty Calculator

The stamp duty charges on property registration vary from state to state. Each state has different charges set for Stamp duty. For example, charges of stamp duty in Delhi is @3% if the vendee is a woman and @5% if the vendee is a man, while the stamp duty in Punjab is @6%. Thus, calculating stamp duty yourself is a bit tricky, so, using a Stamp duty calculator online is the best option you can use. Online stamp duty calculator will automatically calculate the charges on the property you have to pay on your property. You just have to select your state and value of the property.

So, these were all the details related to stamp duty.